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The unemployed aren’t the only ones scrambling for work these days; staffing agencies are also feeling the pain of high unemployment. Whenever there’s a recession the employment services industry is hit first as companies shave off their temporary help.

“Temp employees are the first to go when a company is cutting costs,” says Molly Kalomiris, general manager of Portland-based Northwest Staffing Resources.

According to the Oregon Employment Department, between June 2007 and June 2009 the number of jobs in the employment services industry in Oregon dropped 35%, decreasing slightly more than the national average.

Fewer temp jobs also means a drop in revenue for staffing agencies. Barrett Business Service’s net revenue is down 22.8% in the first quarter this year. Portland-based Employers Overload has seen a 40% drop in traditional business, and relies on the nontraditional role of managing crews on site to stay in business. Those few staffing firms that have tapped into a niche are still growing, such as Lake Oswego-based United Human Capital Solutions, which focuses on health care staffing, and California-based Mainz Brady Group, which specializes in information technology staffing in Portland.

Agencies stay in business because the recession also creates a need for temporary workers, though permanent placements and temp-to-hire positions remain down. After laying off permanent employees, companies turn to staffing agencies to fill in the gaps. Companies are also referring laid-off employees to staffing agencies and when business improves, hiring them through that agency as temporary employees.

Even though there are fewer jobs available, the unemployed continue to turn to staffing agencies to find work. Agencies have seen an increase in applicants, as high as 30% to 40% at Northwest Staffing Resources.

As competition increases, under-qualified applicants apply for any job they can find and over-qualified applicants take lower-level jobs just to get back to work. “People are working at lower salaries than they used to make and they’re so much more qualified,” says Pete Szambelan, Employers Overload CEO. “I’ll tell you, those people are worth their weight in gold.”

With competition for temporary positions fierce, the unemployed continue to encounter challenges as they search for Oregon’s latest endangered species: a job.